Serba Dinamik scores RM465.1 million worth of contracts

KUCHING: Serba Dinamik Holdings Bhd (Serba Dinamik) has managed to scored 13 contracts worth RM465.1 million.

In a Bursa filing, the group announced that it has secured 10 operation and maintenance (O&M) contracts and three engineering, procurement, construction and commissioning (EPCC) contracts.

These contracts are from Malaysia, Bahrain, the UAE, Indonesia and Kazakhstan, and margin wise, the research arm of Kenanga Investment Bank Bhd (Kenanga Research) expects that they will be able to match the group’s historical average gross profit margin of 18 per cent in O&M jobs and 17 per cent in EPCC jobs.

This sudden influx of secured contracts has boosted the group’s outstanding order-book by 8 per cent to RM6.6 billion and stirred optimism in analysts as they view the development as an indication of Serba Dinamik’s ability to secure new clients while expanding its geographical footprint with their first contract from a Kazakhstan client.

Of the RM465 million worth of contracts secured by Serba Dinamik this round, approximately 35 per cent or RM165 million are from the group’s new clientele list that include Kinta Switchgear Sdn Bhd, Regno International, Hadid Engineering (M) Sdn Bhd, and PT Waskita Karya.

In terms of expectations, the contract wins fall within expectations of Kenanga Research and the group is anticipated to meet their replenishment targets.

Looking forward, Serba Dinamik’s geographical footprint is expected to get wider due to its recent acquisition of a 24.8 per cent stake in GSX-listed CSE Global in April.

CSE Global currently has gloval presence in more than 20 countries, including the USA, Mexico, Australia and New Zealand.

“Meanwhile, it may also strengthen Serba Dinamik’s capability in IT-related services in various IT solution platforms, which include systems automation, integration and packages. The group could also tap its know-how on incinerator technology to enhance its capabilities in sewerage treatment projects.”

All in, Kenanga Research is reiterating their outperform call on the group’s stock with an unchanged target price of RM3.95 pegged to a 15-fold FY18E PER.

“We expect share price catalyst to come from delivery of quarterly earnings and continuous contract flows from new and existing customers,” said the research arm.